Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/21339
Title: Does trigger point mechanism create monopoly power for Hong Kong container terminals?
Authors: Fung, MK 
Issue Date: 2009
Publisher: Routledge, Taylor & Francis Group
Source: Maritime policy and management, 2009, v. 36, no. 4, p. 325-336 How to cite?
Journal: Maritime policy and management 
Abstract: In recent years, the Hong Kong port has been challenged by the emergence of the Shenzhen port. This gives rise to a concern that the high terminal handling charges (THC) levied by the Hong Kong terminal operators are undermining the competitiveness of the Hong Kong port. As the major container terminals in both Hong Kong and Shenzhen are operated by the Hong Kong terminal operators, the monopoly power of these operators is commonly believed to be the cause of the high THC in Hong Kong. The theoretical model developed in this study shows that the trigger point mechanism (TPM) used by the Hong Kong Government to control the supply of terminal capacity may be a source of such monopoly power. Two possible scenarios are considered in the model-Scenario 1 in which expansion of capacity is unconstrained (i.e. the Shenzhen port); and Scenario 2 in which expansion of capacity is constrained by TPM (i.e. the Hong Kong port). Under TPM, the Hong Kong Government commits not to grant the right to build new container terminals unless and until the demand for container handling services exceeds the current capacity by a certain amount, which provides the incumbent operators incentives to invest preemptively in excess capacity in order to block the entry of potential entrants. This model is supported by the empirical findings from this study. The results from this study suggest an urgent need for the Hong Kong Government to overhaul the current port development policy as a part of the effort to promote economic integration between Hong Kong and the Mainland China.
URI: http://hdl.handle.net/10397/21339
ISSN: 0308-8839
EISSN: 1464-5254
DOI: 10.1080/03088830903056959
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